I’ve always heard that people who play the lottery are paying a tax on the poor. Meaning, the lottery tends to attract low-income consumers who pay what often amounts to a 100 percent tax on their money. In exchange, they receive an infinitesimal chance at a literal ticket out of poverty. By all accounts, playing the lottery in the name of personal finance would be counterintuitive. But, in fact, I do play the lottery as a personal finance exercise from time to time.

Playing the lottery as a personal finance exercise

When and why do I play the lottery? As for the when, I’ll usually end up playing when it’s least likely that I’ll win. As the jackpots start showing up on the local news or can be overheard in water cooler conversations at the office (to the extent that those exist), I’ll pay the “tax” and buy a ticket. The better question in these instances is why do I play the lottery? And the answer isn’t for the money.

The reason I like to very occasionally play the lottery is that you can’t help but let your mind wander when you purchase a lottery ticket. For a $2 Powerball ticket, what I’m really paying for is the ability to play out a winning scenario in my head. I’m paying $2 not for a chance to win $100 million—although it does come with a juicy one in 300 million chance at a jackpot—I’m paying for a chance to spend that money in my head. Basically, it’s a way to ask myself the question, “what would I do with $100 million?” Without the $2 entry fee, that’s nothing more than a hypothetical. But when I do purchase a ticket, for the 18 hours until the numbers are drawn, it’s a “real” possibility that I have to mentally prepare myself for.

Playing out these multi-million-dollar scenarios in my head is a good way for me to prioritize what I’m doing in my life and whether or not I would continue to do so if money was no object. It allows me to ask myself some important questions that, without that $2 ticket and the potential windfall it brings, I find myself unable to consider.

Would I quit my job immediately? Would I move? Where would I live? How would I spend my days? With whom would I want to spend my time? What percentage of the money would I gift or donate to friends and charities? Will I stop picking up pennies off the ground?

I look at that $2 tax as an allocation toward my under-funded imagination. I can’t get myself to buy-in to the hypotheticals unless I pony up the $2 and have some skin in the game.

Where have all the jackpots gone?

Does it seem to you like we haven’t had a good ole fashioned lottery craze in a little while? You would be correct in that hunch. Since the pandemic, Powerball and Mega Millions have reduced the starting jackpot (previously $40 million) and gone away with minimum increases between drawings that would help to hyper-inflate the jackpot figure. It goes without saying that the higher the jackpot, the more attention the lottery receives, and so begins the ticket buying frenzy.

These frenzies, despite the statistical evidence working against me, are typically when I’ll pay the tax and participate in my own personal finance exercise. As an aside, it’s always funny to me that a $500 million lottery causes such a stir, but the initial $40 million? What am I going to do with a measly $40 million? But I get it. I’m not paying for this $2 thought exercise more than once every few months, at most. Might as well go big.

What if you win the lottery?

If you’re just playing for fun every now and again, there’s no shame in the lottery game. But if you’re regularly plunking down a portion of your paycheck in the hopes of a big payout? Probably not the best use of your money. You’ve already been taxed once, no need to turn the rest of it over.

But you might win!

You won’t.

But you might!

No, you won’t.

Fine, say that you do win. The National Endowment for Financial Education estimates that 70 percent of lottery winners go broke in a matter of a few years following a financial windfall of this sort. Perhaps if the readers of personal finance blogs band together, we can change this unfortunate statistic. But as it stands, after overcoming the one in 300 million odds and winning the lottery, winners have just a 3 in 10 chance of holding onto their winnings. Therein lies the root of the issue, as it typically isn’t personal finance blog readers squandering paycheck after paycheck in the pursuit of largely unattainable riches.

Small lotteries as a form of entertainment

While my lottery modus operandi is to use a newsworthy jackpot as an opportunity to daydream, I’m not above a cheap thrill. Just as the lottery can be a tax on the poor, it can also be a tax on the bored. On occasion, it’s a tax I’m willing to pay. For $2 I can buy five minutes of entertainment in the form of a scratch off lottery ticket. That’s, what, a $24/hour rate? I’ve spent money on less-efficient forms of entertainment, to be sure.

I’m also not opposed to playing the 50/50 raffle at your local high school football game, in which 50 percent of the proceeds go to the winner and the other half goes to whatever noble cause your neighborhood school deems worthy. Contrary to the name of said raffle, you do not have a 50/50 chance at winning, but because there are slightly fewer people playing these raffles than the Powerball, you do have a realistic shot at netting a couple hundred bucks. And if not, hey, it’s for a good cause. Unless that asshole Frank wins it.

Should you play the lottery?

So, should you play the lottery? You do you. But if you’re short on cash? No, I wouldn’t play the lottery. If you’re banking on winning? No, that’s highly improbable (besides, I’m going to be the one to win it!). If you have a couple extra crumpled dollar bills in your pocket and are looking to spice up a random Tuesday? Go for it! But mostly, if you have a hard time asking yourself what results you are hoping to yield via your long-term money goals, playing the lottery is a good opportunity to let your mind walk in the shoes of the uber-rich and consider your options for a few hours. And, hopefully, it helps motivate you to find other means to accumulate such wealth should you unexpectedly not cash in.   

There’s always a one in 300 million chance that you’ll be very appreciative that you played the lottery as a personal finance exercise.